Facebook rises as JPMorgan recommends looking past controversies

Facebook extended a three-day winning streak as JPMorgan told clients that a "compelling" valuation and accelerating earnings growth will help the stock move past scandals and controversies.

The firm outlined the reasons why Facebook is one of its "2019 Best Ideas" in a research report on Tuesday.

Analysts led by Doug Anmuth said that while investor sentiment "remains negative" amid concerns over data privacy, user metrics remain healthy and the revenue slowdown appears manageable.

"We view core FB as stickier than many think, with recent metrics mostly stable and our proprietary survey work showing solid engagement," Anmuth wrote to clients, adding that Instagram "continues to grow rapidly."

Facebook shares rose 2% at 10:31 in New York, paring earlier gains of as much as 3.5%.

JPMorgan reiterated its overweight rating and $195 price target, which implies upside of 41% from Facebook’s closing price on Monday. The average analyst price target is $187, according to data compiled by Bloomberg.

The bullish rating is hardly unusual. According to Bloomberg data, 41 firms recommend buying Facebook, while eight rate it a hold and just four have sell ratings on the stock.

One of those bears is from Pivotal Research Group, which has a Street-low price target of $113. On Monday, analyst Brian Wieser wrote that Facebook’s problems were "likely to worsen" in 2019, adding that while investors have "some appreciation" of the issues Facebook is dealing with, "some are too positive or otherwise looking past the scale of the risks the company faces."

ZAR/USD
16.77
(-0.03)
ZAR/GBP
21.15
(-0.12)
ZAR/EUR
18.95
(-0.03)
ZAR/AUD
11.66
(-0.03)
ZAR/JPY
0.16
(-0.09)
Gold
1798.22
(+0.06)
Silver
18.69
(+0.13)
Platinum
824.50
(+0.30)
Brent Crude
43.14
(+2.10)
Palladium
1961.36
(+0.61)
All Share
55417.89
(-0.66)
Top 40
51154.08
(-0.74)
Financial 15
10472.31
(+1.28)
Industrial 25
76134.69
(-1.67)
Resource 10
52483.78
(-0.20)
All JSE data delayed by at least 15 minutes morningstar logo
Company Snapshot
Voting Booth
Please select an option Oops! Something went wrong, please try again later.
Results
I'm not really directly affected
18% - 1959 votes
I am taking a hit, but should be able to recover in the next year
23% - 2565 votes
My finances have been devastated
34% - 3816 votes
It's still too early to know what the full effect will be
25% - 2746 votes
Vote